A person who is a resident of Canada is subject to
Canadian income tax on their world wide income.
Are you a resident?
Whether or not a person is a resident of Canada is determined by many
amount of time spent in Canada is not the only factor considered. Other
maintaining a residence in Canada
relatives in Canada
bank accounts in Canada, and
other social and economic ties.
person who is a resident of Canada, and moves to another country, could still
be considered to be a resident of Canada for tax purposes. If you left
Canada in the year to travel or live abroad, see the Canada Revenue Agency
(CRA) guide T4131
Canadian Residents Abroad.
For newcomers to Canada, you have to report
your world income for the part of the year that you were a resident of
Canada. Some personal tax credits will be
prorated based on the day you immigrated to Canada.
If you are a non-resident of or newcomer to Canada, see the
following information on the CRA web site:
A person who is not a resident of Canada for any part of the year, and
visits Canada for less than 183 days in a year, will pay Canadian income tax
only on income earned from Canadian sources.
A person who is not a resident of Canada for any part of the year, but who
visits Canada for a total of 183 days or more in a year, may be deemed to be a
resident of Canada, and subject to Canadian income tax on their world wide
income for the entire year.
Non-residents and deemed residents may or may not have to
file a Canadian tax return. Much Canadian source
income will have had Canadian tax withheld when it was paid,
and in many cases there is no requirement to file a Canadian
tax return. The most common types of income earned in
Canada which are required to be reported on a Canadian tax
When a non-resident or deemed resident files a Canadian tax return, they are
taxed at the current federal tax rates,
plus a surtax of 48% of the federal tax, unless income was earned from a
business with a permanent establishment in Canada. In this case,
provincial or territorial tax is paid on that income.
Deemed residents can claim the federal basic
personal tax credit plus other applicable tax
credits. For non-residents, the amount of non-refundable tax credits
allowed depends upon whether Canadian-source income is 90% or more of total
world income for the year.
When a non-resident disposes of certain taxable Canadian
property, such as real estate, there are certain procedures
to be followed, which include paying a tax of 25% of the
gain on the property. If this tax is not paid, the
purchaser of the property will be liable for the tax, and
thus may withhold 25% (50% in some cases) of the selling
price of the property. See disposing
of certain types of property in the Canada Revenue Agency (CRA) guide T4058
Non-Residents and Income Tax for more information.
If a tax treaty exists between Canada and your country of
residence, the terms of the treaty may reduce or eliminate
the tax on some types of income. You may be a deemed non-resident of
Canada for tax purposes if you were a resident of Canada in the year,
and, under a tax treaty, you were considered to be a resident of another
country. In this case, you will be treated as a non-resident for tax
Non-Resident Withholding Taxes
/ Elective Returns
Canadian payers must withhold tax on payments of certain
types of income to non-residents. The tax withheld is usually considered
your final obligation to Canada for taxes on the income. However, for
certain types of income, you have the option of filing a Canadian income tax
return. This may allow you to receive a refund of some or all of the
non-resident tax withheld.
The most common types of income which are subject to
non-resident withholding tax are:
Old Age Security pension
Canada Pension Plan or Quebec Pension Plan benefits
registered retirement savings plan payments
registered retirement income fund payments
If you have received any of the above types of income, you
may be able to recover some of your withholding tax by filing a Canadian tax
return. This is called an Elective Return. For more information,
A person who is a resident of Canada for any part of the year is subject to Canadian
income tax on their world wide income during the time that they are a
resident of Canada. During the time that they are not a resident
of Canada, they will pay Canadian
income tax only on income earned from Canadian sources.